June natural gas is expected to open 2 cents higher Friday morning at $3.21 as traders study more extended cool temperature forecasts and try to navigate a directionless market. Overnight oil markets were narrowly mixed.
Traders are finding the natural gas market a tough way to make a buck. "This market remains frustrating to both the bulls and the bears as it has been unable to sustain a price move in either direction in almost a month," said Jim Ritterbusch of Ritterbusch and Associates in a morning report to clients. "[Thursday's] seemingly bearish EIA storage report provided a case in point as an injection that was about 6 Bcf larger than anticipated exerted only moderate selling pressure that is being largely negated this morning. Some of today's support appears forthcoming from some adjustments to the one- to two-week temperature forecasts favoring much broader coverage of below-normal temps than generally predicted yesterday.
"The likelihood that next Thursday's EIA report will show a reduction in the surplus of as much as 20-25 Bcf is also spurring some buying interest. Regardless, making another run at this week's highs of $3.31 could prove arduous unless weekend updates suggest some major revisions toward the cold side. Otherwise, we will await a close to below $3.16 to force further decline to our targeted $3.05 area, a level that approximates current spot pricing at HH."
Gas buyers for weekend power generation across the ERCOT power pool will have little wind generation to work with at first, but as the weekend wears on renewables should ramp up sharply.
"Fair weather and a warming trend are expected during the weekend into early next week," said WSI Corp. in its morning forecast to clients. "Max temps will rebound into the 80s to near 90. Humidity levels will remain comfortable but start to creep up during Monday-Tuesday.
"Weak wind generation is expected [Friday]. Output is forecast to bottom out around 1 GW or less. A diurnally influenced return southerly wind will cause output to ramp up tonight into early next week and output is forecast to climb up 10-13+ GW. Plentiful sunshine will support ample solar through the majority of the forecast period."
In its 8:30 a.m. EDT release, the Labor Department reported non-farm payrolls rose by 211,000, which was more than the 190,000 forecast by economists. The unemployment rate fell to 4.4%.
In overnight Globex trading June crude oil dropped 15 cents to $45.37/bbl and June RBOB gasoline rose fractionally to $1.4825/gal.